Updated: Aug 6, 2020
Expansion is considered to be a very important aspect and milestone in an organisation's journey. Opening up a branch office overseas today is a symbol of success for any organisation. Choosing to pursue global expansion is rarely one single rationale driving a company’s decision to enter an overseas market, there are a variety of common factors that influence such decisions.
If you’re still testing the waters about expanding overseas, you need to understand the reasons for why businesses should go global. Not only does expansion provide diversification and additional revenue, it also exposes one to different methods of doing business. In addition, businesses that expand overseas can benefit back home from increased cultural sensitivity, competitive intelligence, new opportunities and better management practices.
Revenue Growth : Expanding into multiple markets tends to enhance revenue growth while improving a company's return of investment and reinvestment rate.
Wider customer base : Expansion helps by extending the businesses global footprint, new audiences experience for products or services.
More Funding opportunities : Companies with multinational operations can benefit from lucrative investment opportunities that may not exist in their home country
Diversification : Companies with international operations can offset negative growth in one market by operating successfully in another. Companies also can utilize international markets to introduce unique products and services, which can help maintain a positive revenue stream.
Competitive advantage : International expansion gives competitive edge over their opponents, it creates a brand presence and increases a company’s perceived image.
When considering expanding internationally, many businesses think that the only way to achieve their global goal is by setting up their own entity in a foreign country. Own entity should be set up only if,
You are a large enterprise
You have long term plans
Have already tested the waters and done few POC's
Target audience is Government
Have adequate cash flow
However, a cost-effective and faster way to expand business into new markets is collaborating with local partners having strong presence in their own market.